DARIEN, Conn., Nov. 25, 2013 /PRNewswire/ -- Investors increasingly will discard traditional and rigid benchmark-based active investments in favor of "new active'' outcome-oriented strategies during the five years ending in 2018, according to a new whitepaper from Casey, Quirk & Associates LLC, a leading management consultant to the global asset management industry.
New active strategies, erasing the distinctions between categories now labeled traditional and alternative, will attract $3.4 trillion of inflows over the next five years, according to Life After Benchmarks: Retooling Active Asset Management, the Casey Quirk analysis. Passive, or benchmark-tracking investments, will take in almost $1 trillion over the same period. But traditional active strategies will suffer $1.8 trillion of outflows amid shifting investor demands, endangering asset managers worldwide that remain wedded to legacy investments, according to Casey Quirk.
Flows into new active mandates – including unconstrained bond and equity investments, private capital, trading strategies, dynamic multi-asset class solutions, and real assets – will produce $262 billion of fee revenue, close to 45% of the worldwide asset management revenue opportunity generated by manager turnover and net new growth during the next five years, Casey Quirk predicted. By contrast, the revenue opportunity from low-fee passive investments will total $20 billion over the same period. Approximately $322 billion of fee revenue opportunity will come from traditional benchmark-based active strategies, but with the anticipated outflows, asset managers will fight over a shrinking slice of the market.
"Active managers able to meet investor demands for outcome-oriented solutions will enjoy growing opportunities,'' said Daniel Celeghin, partner at Casey Quirk and lead author of the Life After Benchmarks whitepaper. "Managers unable or unwilling to retool their legacy investment culture will face severe headwinds."
While the world's largest institutional investors and their advisers are now leading the transition to new active strategies, as their cash-flow needs have become more acute in an increasingly volatile post-crisis environment, Casey Quirk expects investors of all sizes and types worldwide to similarly seek out more outcome-oriented asset allocation frameworks.
To obtain the whitepaper Life After Benchmarks, please visit www.caseyquirk.com.
About Casey, Quirk & Associates LLC
Casey Quirk is a management consultant that focuses solely on advising investment management firms. Casey Quirk's work with senior leadership teams includes broad business strategy reviews, investment positioning and strategy, market opportunity evaluations, organizational design, ownership and incentive structuring, and transaction due diligence. In the past five years, Casey Quirk has advised a majority of the top 25 investment management organizations worldwide. For more information please visit www.caseyquirk.com.
SOURCE Casey, Quirk & Associates LLC